Wednesday, February 16, 2005

When the workers are the means of production

The National Hockey League on Wednesday cancelled its 2004-05 season after the league and the players' union were unable to reach an agreement on restructuring team salaries.

In announcing the cancellation in New York, NHL Commissioner Gary Bettman said it was his "sad duty" to scrap the entire season because the two sides couldn't agree on a salary cap, something the league maintains is necessary for its survival.

"When I stood before you in September, I said NHL teams would not play again until our economic problems had been solved," Bettman added. "Because that solution has not yet been attained, it no longer is practical to conduct even an abbreviated season."

With the cancellation, the NHL earns the distinction of being the first North American sports league to cancel an entire season due to a labor dispute. It will be the first time the league hasn't awarded the Stanley Cup since an influenza outbreak cancelled the playoffs in 1919.

It's a sad state when the most powerful unions on the continent are for professional athletes. The curious part is that the unions have yet to realize that they don't need owners. The revenue stream -- $2 billion for hockey -- is entirely disproportionate to the capital investment required. When someone pays $600 million for a football team, all he's really buying is the name and the right to print money.

This is hardly a new concept. United Artists was formed in 1919 by Charlie Chaplin, Mary Pickford, Douglas Fairbanks, and D.W. Griffith -- artists with the personal fortunes to control their own craft. Steven Spielberg, Jeffrey Katzenberg, and David Geffen came to a similar conclusion in 1994 with the founding of DreamWorks SKG. Every big-name Hollywood actor has his or her own production company. Even Joshua Molina and Bonnie Hunt have their own production companies; there's no reason Darby Hendrickson and Doug Zmolek can't have an ownership interest in a professional hockey league.

In major league sport, player salaries make up 60 to 70% of league revenue. In the NFL, for instance, salaries are 64.75% of gross revenue. The NFL's gross revenue is about $4 billion, according to the salary cap figures, which means the players are paying the owners $1.4 billion a year for the right to play.

Here's how such a league could work. The players form a partnership to own the league. The league would create and locate the franchises. Each league would hire a manager for each franchise. The manager would be given two budgets -- one for on-the-field costs and one for everything else. The players could allocate 80% of revenue to on-the-field costs, should they choose. That's the incentive for the players, then -- a substantially larger piece of the pie. The manager would operate in much the same way an owner does now. The manager would hire an on-the-field staff, negotiate leases, and threaten to move the team in order to win concessions from local government. The manager would be paid based on on-the-field production -- wins and losses -- as well as revenue production -- ticket sales, jersey sales, local television contracts.

Player salaries and player allocation would work the same as today. Free agency would work, more or less, the same way as today. Franchises would continue to compete for player services out of their budgets.

Player salaries would be higher. Fans would not be upset with strikes and lockouts. The players would have to meet each off-season to agree on any changes to the business, which would be done mostly through locally elected representatives.

Several hundred hockey players just lost a year of earning millions of dollars because they lack the vision and courage to understand that they are the product and they are perfectly capable of selling themselves.

1 Comments:

I agree,

I love NHL Hockey. and recently I have bought stock in it. Not like real stock on Wall street, but a stock market that is strictly for sports.

You have seen it? Its pretty cool. You buy issues for your favorite teams and you make real money. Not like a fake stock simulator. I cash out Dividends each time the team wins. Also I can sell my team stock when the price goes up.

check it out if something like this interests you.heres a link http://allsportsmarket.comyou can log in and check it out for free..

They just released IPO'S for NHL Hockey this week, so there are alot of good deals there.